Why commodity finance is ripe for stablecoin

Global commodity trade finance faces two major challenges: first, it is mired in inefficient, slow processes that cause delays and increase costs and risks; and second, the pool of capital available to commodity firms has shrunk significantly in recent years. However, a growing number of businesses see an opportunity to solve both these challenges through the digital currency stablecoin.

Used to transfer more than $27 trillion in 2024, stablecoin is pegged to fiat currencies so it doesn’t introduce any extra volatility into trading books. By running on blockchain technology, it offers all the benefits of efficiency, speed and immutability but, crucially, through a multi-user platform, commodity firms could select lending partners and have access to enormous new pools of capital. The crypto firms that would be the lenders are hugely well capitalised and seeking new areas to invest. Importantly, they are also not subject to the same regulatory capital charges that caused many banks to retreat from commodities. As well as giving them exposure to the commodities sector, this form of lending would give crypto firms exposure to the relatively high returns of the stablecoin market.

Commodity trading is global, capital-intensive and highly sensitive to settlement risk. Few industries face such a mismatch between the velocity of physical flows and the inertia of financial ones

Casting off legacy systems

Applying new technology to commodity finance is long overdue, with many processes rooted in a past era. Payments, for example, move slowly across a chain of correspondent banks. Treasury operations are fragmented across currencies and jurisdictions. Access to credit can be patchy with banks entering and exiting the sector depending on shifting policies, regulations and political priorities – even though many credit structures are asset-backed and not necessarily based on balance sheets alone. This cyclical presence makes banks less reliable as sole long-term partners. These inefficiencies translate directly into costs: higher working capital requirements, limited liquidity options and settlement risk that persists for days.

Commodity trading is global, capital-intensive and highly sensitive to settlement risk. Few industries face such a mismatch between the velocity of physical flows and the inertia of financial ones. Stablecoin can address this gap in three ways:

• Payments: near-instant settlement reduces counterparty risk and frees working capital that would otherwise be trapped in transit.
• Financing: tokenised payment rails enable new forms of short-term credit and liquidity provision beyond traditional banks or private funds.
• Transparency: every transaction is recorded immutably, enabling regulators and counterparties to monitor flows in real time while traders retain control of their own data.

Additionally, stablecoins are programmable, due to their blockchain infrastructure. As well as settling in seconds and operating 24/7, stablecoin transactions can embed compliance checks and enforce rules such as conditional payments, where funds will only be released to pre-programmed parties. For example, with a digital bill of lading there might be a conditional code, and the payment is released automatically when that code is seen. Much of this would negate the need for inefficient credit tools, such as letters of credit. It represents a complete re-engineering of current workflows down to the instrument level.

Growth and stability

Stablecoin has already proven its utility in capital markets, transferring trillions of dollars to become one of the fastest growing forms of digital money. The enormous role it can play in regulated markets is no longer theoretical. Regulators in the US, UK and Singapore are moving towards frameworks that recognise fiat-backed stablecoins as part of the regulated payments ecosystem. With legal clarity emerging, the barriers to adoption for institutional use are falling.

The early concerns and questions around the use of stablecoin have now been addressed. Like traditional finance, it faced early scrutiny around custody, security and oversight. But progress in technology combined with evolving regulatory frameworks have tackled these issues head on. Today, institutional-grade stablecoin infrastructure exists to safeguard assets, protect value and ensure data security. This opens the door for large-scale, regulated transactions that meet the same standards – and, in some respects, exceed the safeguards – of traditional financial rails.

A new liquidity channel

What stablecoin introduces to commodity finance is not just a new form of money, but a new liquidity channel. Instead of relying solely on banks or funds, physical traders gain access to a third rail: one that is global, instantaneous and inherently auditable.

Just as the letter of credit once unlocked global trade by formalising trust between distant parties, stablecoin can unlock a new phase of efficiency in commodity finance. It does not replace banks or funds, but sits alongside them, offering resilience, diversity and choice in how trade is financed and settled. Some recent commodity industry initiatives – such as Komgo and Covantis – already tackle the issue of documentation workflows through a digital platform. However, the underlying financial infrastructure is the same as it always was from the beginnings of commodity trade finance.

What stablecoin introduces to commodity finance is not just a new form of money, but a new liquidity channel

The next shift will almost certainly be away from bank-intermediated finance towards peer-to-peer finance enabled by blockchain technology and based on a stable, underlying digital currency. Stablecoin offers that opportunity, not in some distant future, but now; it is already here, already moving trillions of dollars, and already gaining institutional legitimacy.

The technology is here for commodity firms to embrace stablecoin as alternative payment, borrowing and deposit rails and reach out to new pools of capital. New platforms and startups – such as DeCoFi – and large crypto firms are already gearing up.

For an industry long accustomed to the weight of paper and the inertia of legacy banking, the question is no longer if stablecoin will shape commodity finance, but how quickly the shift will occur.

Ronan Julien is the chief executive of DeCoFi, a platform enabling decentralised community finance, and Jean-Marc Bonnefous is a managing partner at Tellurian Capital and investor in DeCoFi.

Bonnefous will be leading a roundtable discussing the opportunities and challenges involved in bringing energy trade finance onto the stablecoin ecosystem at Energy Risk Europe on November 25, 2025.